Semi/Early Retirement at a young age

C-dog

After a monster tax bill to pay in Jan, I’m now back where I can make contributions to my SIPP. Well I would be if:

1) it was wasn’t completely filled for this year (as is my wife's)
2) I’m drawing down from my entrepreneur relief taxed at 10% monies
3) My cherished Vanguard Lifestrategy 100% accumulation, wasn’t seeing record highs.

My plan is to open an x-o or other similar taxable account and start depositing there. I should be able to contribute 10-12k before the start of April.

Anyone have other suggestions?

Do I need to structure my taxable account in any particular way to attain benefits at a later stage when I come to selling my shares?

TheTracker

C-dog wrote: »

After a monster tax bill to pay in Jan, I’m now back where I can make contributions to my SIPP. Well I would be if:

1) it was wasn’t completely filled for this year (as is my wife's)
2) I’m drawing down from my entrepreneur relief taxed at 10% monies
3) My cherished Vanguard Lifestrategy 100% accumulation, wasn’t seeing record highs.

My plan is to open an x-o or other similar taxable account and start depositing there. I should be able to contribute 10-12k before the start of April.

Anyone have other suggestions?

Do I need to structure my taxable account in any particular way to attain benefits at a later stage when I come to selling my shares?

You're wealthy. You could structure a portfolio of index trackers that meets your needs more effectively. For small sums VLS is fine.

You're smart. You can read the canon on asset allocation, understand why VLS is structured the way it is, and be in a position to construct a portfolio. You may wish to have an IFA help if the cost exceeds the benefit.

With a portfolio of trackers rather than one you can place different assets into different tax wrappers in accordance with your need. As you've wealth, that probably means high risk/return assets in tax wrappers and others outside.

You should look to spread distribution to family members including the little one. For example trusts. For example dividends to parents who make lovely contributions to a trust for the little one

I'd see what you can wring out of your accountant on tax advice before heading to an IFA or "wealth advisor" as some call themselves.

C-dog

Thanks so much for the advice TheTracker. I guess its time I start looking at assets and "the portfolio". I like the buy and forget nature of LS100 as it allows me to concentrate on what I'm good at, which is making money.

A little bit of researching into Asset allocation and from that, different trackers should be an easy move overall. I'm unsure of the benefits of putting some assets into different tax wrappers. Do some trackers receive tax free incomes where others not? Our ISAs are also filled for this year too, so its all unfortunately going in taxable accounts. I might hold it as cash until I have a min of 10k for investment. This would give me a month or so for research.

I'm not keen on VCTs although I can see the merits. They're just not for me.

Once C-Dog jnr joins the world she or he will indeed become an instant account holder.

My accountant is very clear in that he doesn't advise on personal finance. He absolutely hates pensions and as far as investing goes, he's astounded I've gone it alone so far.

C-dog

On a side note, we've been tracking our spending a little more closely recently.

January came in as follows:
Joint Expenditure 'to keep the house' - £480
Discretionary Expenditure - £100 each
Extravagances - £80
Ski Holiday - £1,700

£760 before the mandatory Ski Holiday. Even with that £2,460 spending doesn't really phase me.

Cancelled Sky TV. Don't miss it in the slightest. Wife does though. How will she get her Kardashian fix.

tigerspill

TheTracker wrote: »

You're wealthy. You could structure a portfolio of index trackers that meets your needs more effectively. For small sums VLS is fine.

.

Just out of interest, why would VLS not good for larger pots?

C-dog

TheTracker wrote: »

With a portfolio of trackers rather than one you can place different assets into different tax wrappers in accordance with your need. As you've wealth, that probably means high risk/return assets in tax wrappers and others outside.

Could you elaborate on this for me please TheTracker? Have you examples of how this would be structured?

C-dog

So a couple of large payments came in this weekend and I've taken £7.5k out in dividends. For the first time I'm unsure what to do with the payment.

It's got to be held outside the SIPP as I'm underweight in funds I'll need for ER (plus it's the drawings from the Entrepreneur relief valuation). This is really my first toe dipping into proper investing. With the SIPP, I've seen the tax advantages as an instant bonus, so if the market dropped I haven't really lost anything.

I keep reminding myself that "it's time in the market" that's important.

Why can't we be in a bear market. I'd love some discounted shares at this early stage of my investing career.

C-dog

Haven't made a purchase yet.

Been trying to figure out TheTrackers reasoning, but as I'm 100% in equities and 0% bonds, I see now benefit of holding any different shares in the unwrapped account.

Anyone have a thought on this?

From Monevator

If your ISAs are stuffed full and you can’t or don’t want to put more money in a pension, you might want to consider holding low-yielding shares in unsheltered accounts and save your ISAs for your higher-yielders, especially if your investing horizon has decades to run. (This is equally true for passive investors. Check the yield on your ETF or index fund, as they do vary quite a bit. Remember that Accumulation funds accrue tax, too).

I see my plan as this now

Start building my asset allocation and spreading things about as best as possible. For now this would mean adding Vanguard UK Government Bond Index Fund to the mix and building that up to 10-20% of the total. I'm particularly wary of the market highs, so this gives me some time to see where its going.

Thrugelmir

C-dog wrote: »

Why can't we be in a bear market. I'd love some discounted shares at this early stage of my investing career.

Dig around and you'll find bargains. As the Company's capitalisation gets smaller so does the coverage. Both in the media and from analysts. Find shares of interest and track them. At some point a buying opportunity reveals itself.

TheTracker

C-dog wrote: »

Could you elaborate on this for me please TheTracker? Have you examples of how this would be structured?

Whoops missed this, but I see you got there in the end. Put what you feel are the highest yielders in sheltered accounts. Of course that's not as easy as it sounds. I personally load my ISA with EM, Small cap.